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Friday, May 23, 2014

MINIMUM WAGE IS AT AN ALL-TIME MINIMUM. IT SHOULD BE $20.12 AN HOUR, IF ...

Americans have reached a bad state when it comes to wages.

In PRICES HAVE BEEN FALLING FOR YEARS! INFLATION? MAJOR DEFLATION HAS BEEN UNDERWAY SINCE 2007. SO WHY DOES LIFE SEEM HARDER? THE ANSWERS ARE COMING NEO, I show the chart socialists and politicians don't want you to see.

Here it is, again:




Likely, this is the most important chart ever you shall see published regarding economy.

The chart says that true wages, or "real" wages if said by economists have been falling for years in lockstep because capital spending per prime age worker, those between 25 and 54, has been falling.

Contrary to what many believe, wages rise when capital rises. Wages are a consequence of producing wealth under efficiency. The more wealth produced and gained by each worker, the higher wages would rise. 

Socialists and other pro-labor agitators don't want you to know this because it  slays their dragon of trickery.

Capital spending increases when labor becomes pricier. Yet, when labor becomes abundant, capital spending falls. Since 1980, wages have fallen 41% and capital spending has fallen 49.5%. Not so coincidentally, the head count of prime age workers has risen 45.27%, a massive increase driven by immigration and descendants of recent immigrants.

In ELECTRICITY PRICES. SHOCKING, ISN'T IT? THANKS, NIXON, I tell of then president Nixon closing the gold window and thus decreeing the dollar no longer could be redeemed for gold. Before Nixon did so, 35 dollars bought one ounce of gold, by law. Today, the Federal Reserve note dollar buys the same as 9 cents of one gold-backed dollar did before Nixon slammed shut the gold window.

Let's have a look at the true minimum wage priced in True Dollars™.



In 1971, a minimum wage job paid $1.60 an hour. Today's true minimum wage is a measly 54 cents.

So today's minimum wage is 33.4% of the 1971 minimum wage. Today's minimum wage has fallen -66.3% from the 1971 minimum wage and -69.5% from the peak true minimum wage of 1968.

Back in 1971, my much older brother could afford car payments on a new Ford Pinto on his McDonald's fast-food job while working through his senior year of high school.

If we take the average of the true minimum wage in every year the minimum wage raised by law, that average would be $1.33. Today's minimum wage has fallen 59.4% from that average of $1.33.

To equal the average minimum as calculated above, in today's gold-less dollar, the minimum wage would need to be $15.19. To equal peak minimum wage set in 1980, today's minimum wage would need to be $20.12!

In BUT IT IS FOR INEQUALITY! AT WHAT POINT DO PEOPLE STOP EXPONENTIALLY DOUBLING DOWN ON STUPIDITY?, I called for an end to minimum wage as well as an end to specific welfare. The combination of minimum wage and welfare amounts to a subsidy to employers whose capital structure gets predicated on using minimum wage workers on the whole.

As no one would work at a loss (wages - living expenses), would-be workers would reject all wage offers at less than break even. 

So the right move is the end minimum wage laws and all political interference in trade. Another right move would be to restrict immigration for the next 10 years and perhaps longer. 

If the Congress would evict the 20 million or so illegal aliens residing in the USA, a significant chunk of the pool of low wage bidders would be erased. That would go far to pressure wages upward for no-skill workers.

You can't end poverty merely by giving people welfare. It doesn't work. Think about it. Poverty exists even though there is TANF, SNAP, Section 8, Pell, Medicaid, Medicare and so on.

There are no means by which living standards can better that do not involve the increase in wealth per capita of prime age workers. To discover how to make increasing returns to capital is to solve the problems of poverty and lowering living standard. 

For those who doubt the connection between capital spending and wages even when shown to their eyes as above, Miha Zupan tells the story of rapid rise of Koreans.